Isra-Mart srl : Fight against EU Carbon Tax Won't Be Too Hard

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"The Chinese airlines need to do business in Europe. They have a lot of demand to fly there, so they're probably going to have to, in the end, sort of tough it out and deal with it."

The European Union has planned to impose a carbon tax starting next year, which means that the more than 2,000 airlines that serve Europe will have to pay a duty for their emissions when they enter the market.

Among the 33 Chinese air companies to be charged the tax, China's top three airlines -- Air China, China Southern and China Eastern -- along with the China Air Transport Association, are filing a lawsuit against the imposition of the carbon tax, which will cost China's aviation sector an additional 800 million yuan (122 million US dollars) a year.

However, Benjamin Cavender, associate principal at China Market Research in Shanghai, said the lawsuit is probably not going to work. The carbon tax looks to be inevitable, and the Chinese airlines are not likely to quit the European market.

"The Chinese airlines need to do business in Europe," said Cavender. "They have a lot of demand to fly there, so they're probably going to have to, in the end, sort of tough it out and deal with it."

Cavender thinks that the lawsuit is more of a public relations strategy as the air companies are very likely to pass the costs on to the passengers.

"Without the news of the tax being an issue, the average consumers probably wouldn't even know that there was a carbon tax being imposed. They will just know the prices to the tickets are going up," he said.

It is estimated that the price of a ticket from China to European countries will probably rise by 200 yuan, according to a Beijing News report.

Cavender thinks that the fight won't be too hard in the long run as Europe is one of the hottest growing destinations for Chinese consumers traveling out of China today. The airlines need that growth and won't want to bring harm to themselves, he said.

Moreover, domestic airlines want to attract more consumers who are currently choosing to fly foreign airlines due to perception of better services and better routes, as overseas travelers leaving China are increasing as a growth segment, said Cavender.

The European Union plans to levy carbon emission taxes on flights departing or landing in the region starting January 1, 2012. Airlines whose emissions exceed a set quota will be forced to buy extra credits from less prolific polluters in the industry.

Aside from China, air companies of the United States, Japan, Singapore and even some from the European Union, have also defiantly opposed the carbon tax. The United States has filed a legal action on the issue last year and the result is expected to be released in May